9:57 PT: Well, here we are. This is Jason Snell reporting live from the Town Hall theater on the Apple campus in Cupertino. The room is filling up with members of the media and analyst communities, music is playing (Mike Doughty’s “27 Jennifers,” if you must know), and we’ve been told to silence our cell phones under penalty of death, or at least very stern looks from Apple PR representatives.

10:01 PT: Steve Jobs walks onstage. “We’re really excited to share some great news with you about the iPhone software roadmap… We’ve got some really cool stuff to announce, so let’s get on with it.” Now here come the iPhone statistics, based on the first eight months: In just eight months, the iPhone has garnered a 28 percent market share, second only to RIM (Blackberry), based on Q4 data.

US mobile browser usage: iPhone 71 percent of market share. “So for the first time, you really do have the Internet in your pocket.” Now, on to what we’re going to talk about today. Phil Schiller SVP/Product Marketing and Scott Forstall, VP/iPhone Software “will do the heavy lifting today.”

10:02 PT: Phil Schiller comes on stage, and Jobs sits down. This is iPhone in the Enterprise. “We’ve had some great customers, wanting to adopt the iPhone into their enterprise environments. For example, Genentech. They have thousands of iPhones deployed across multiple organizations.” Quote from Todd Pierce, VP at Genentech: “The iPhone is a watershed event in mobile computing for corporations.” Next example: Stanford University, with hundreds of iPhones deployed. Another positive quote, from the CIO at Stanford University.

10:05 PT: “We’ve been hard at work trying to understand what it takes to bring the iPhone out across enterprise.” Here’s the list. Push email. Great calendar integration - pushed to them over the air all day long. Push contacts. Global address lists. Additional VPN types, including Cisco IPsec VPN. Two-factor authentication, certificates and identities. Enterprise-class Wi-Fi, with WPA2/802.1x. Tools to enforce security policies. Tools to help them configure thousands of devices as they deploy iPhones and set them up automatically. And they want the ability to protect that data by remotely wiping it.

“That’s a long list of important features,” Schiller says. “They say if we just did these things, it would really help adoption in the enterprise. And we’re doing all of these things in the next release of the iPhone software.”

10:07 PT: “They’re much more specific than that,” Schiller says. Customers want Microsoft Exchange support. “We have licensed the ActiveSync protocol to build directly into the iPhone,” Schiller says. That’s a huge request from their customers.

Here’s a flowchart about “the old way” of doing phone e-mail. It’s a cartoon phone that looks like a Blackberry. Schiller is showing how mail goes through a middleman, a message server, and an Exchange server, before it gets to your phone. “And of course it adds risk to reliability, as we’ve seen from time to time,” he says, winking at at recent Blackberry outages.

With ActiveSync, the iPhone talks directly to Exchange. So the iPhone will get push e-mail, push calendaring, push contacts, global access lists, and remote wipe, all while talking to Exchange. And it’s built into the existing applications — mail goes into the same Mail program, calendar into the same Calendar, and so on.

10:11 PT: Schiller’s demoing Exchange support. You add a Mail account and choose Exchange, then fill in the data. The account settings in Mail include ActiveSync settings for Calendar and Contacts as well.

10:13 PT: Now we’re adding a new contact, typing in a name. And according to Phil, that name has automatically been added to another iPhone that’s connected to the same server. And then the iPhone in the audience adds a phone number to the contact, and it automatically appears on Phil’s iPhone.

Push e-mail is supported, so as soon as an e-mail is delivered, it appears at the top of Phil’s mail list on his iPhone. Meetings, too. You can see a list of attendees in a meeting, drill down to an individual attendee, see their contact info from the server.

And now we’re going to destroy the phone. It’s remotely wiped - all of a sudden it blacks out, the white Apple logo appears, and it’s rebooting with all its precious secret data removed.

They’ve tested this on site with a bunch of companies. One example was Nike, and there’s a quote from the CIO of Nike endorsing the iPhone as a “plug-and-play enterprise solution.” Next on the iPhone love fest is the Sfest is the SVP of IT at Disney, who provides another quote endorsing the goodness of the iPhone.

10:18 PT: Schiller leaves the stage, and now it’s Scott Forstall to talk about the iPhone SDK. But first, an update on Web apps. “This has been incredibly successful,” he says. “There are already more than a thousand web applications available for the iPhone.” Points out that web apps can now have icons on the home screen, as we saw at Macworld Expo.

Forstall is highlighting a few favorite Web apps for the iPhone: Facebook, Bank of America.

“Starting today we’re opening up the same APIs and tools that we use to develop our own applications today. Now, there are a lot of pieces that make up an SDK. But the most important are the APIs and the platform. And we have a great one, Mac OS X.” Layers: Core OS, Core Services, Media, and Cocoa. “To build the iPhone OS, we took the bottom three layers and moved them across. Now Cocoa is interesting… it’s the best application framework out there, but it’s based on a keyboard and mouse.” Instead, they build Cocoa Touch, based on touch interaction with the iPhone OS.

10:23 PT: In the Core OS layer, much of the stuff in the iPhone core OS is the same as on the Mac side. When it comes to power management, it’s even more robust. The core OS manages all power management automatically.

Now moving on to the Core Services layer. SQLite, an entire database layer. Core Location, which uses cell tower and wi-fi data to figure out where you are.

Now on to Cocoa Touch. “Built all around the concept of touch as an input.” Handles single touches, multi-touch, and gestures.

10:29 PT: On to Xcode. Knows all about the APIs. Integrates with source control management. Remote debugger. Runs on a Mac. Now to Interface Builder, which you use to build user interfaces on the iPhone, too. “Interface builder makes building your UI as simple as drag and drop.” Complete library of all the UI controls of the iPhone are in there.

10:32 PT: Next on the tour of Apple’s developer tools, which have been applied to iPhone development now, are Instruments. Check your memory usage and other ways that your programs can affect the iPhone hardware, and record them live, so you can measure performance.

10:34 PT: Now a brand new development tool, the iPhone Simulator. Runs on a Mac, and simulates the entire API stack of the iPhone OS. So right here, on your Mac, you can run your application in the simulator, which gives you an incredible turnaround time on development.

“The simulator works great side by side on your Mac with Xcode,” Forstall says. “You can debug it while it’s running in the simulator.”

“So we have a fantastic set of tools, in addition to the amazing set of frameworks that make up the iPhone OS.”

10:36 PT: Now we’re demoing the iPhone simulator and tools on a Mac. Creates a “Hello World” app in Xcode, a single click to build and run the program in the simulator.

Now let's try it live on an iPhone. He's got his phone connected to his Mac, now changes the Xcode setting to build for the physical iPhone. Presses the button, runs the program, connects with the debugger, and... the program runs on the physical iPhone.

10:39 PT: So now a sample application that took only two days to write. It's called Touch FX. He taps to choose a photo, which brings up the standard image picker. He picks a photo, and touches the screen, which distorts the photo where his finger is touching. It's an OpenGL distortion. And when he picks the finger up, the effect remains. Then he pinches the face of the guy in the picture, and his face gets a pinch effect. To undo it, he shakes the phone—like an Etch-A-Sketch—and the image goes back where it went, because the program has access to the phone's accelerometer.

10:41 PT: In two weeks, they wrote a game, Touch Fighter. OpenGL game, OpenAL for audio. Using accelerometer to fly the ship by moving the phone, and tap on the screen to fire.

Now he uses his developer tools on his Mac to live-record the game, showing how many frames per second the game is getting, what stress it's putting on the iPhone hardware—great for performance measurement for developers.

10:45 PT: "This is what we could do in two weeks and 10,000 lines of code. But I don't want to give you my word. So a few weeks ago, we called up a handful of companies, and asked them to send out a couple of engineers each, to see what they could accomplish in two weeks on an SDK they'd never seen before. In fact, most of them had never touched a Mac for development before."

Now a developer from Electronic Arts takes the stage, Travis Boatman. "We wanted to take advantage of the touchscreen, the accelerometer, video and audio." So they did something based on Spore, their forthcoming game.

The accelerometer controls the spore moving around on the screen, in a game where you're trying to eat anything smaller than you and avoid anything larger than you. When you succeed, you go to the Evolution Editor, which uses touch technology to press icons and select a new trait for the game's creature. He's also using touch to drag around the eyes on the creature, redesigning it.

He says it took two days to get Cocoa Touch up and running, but once they did that, they were able to get the game up and running. And then, finally, a video cutscene using the video technology in the iPhone.

10:49 PT: "Clearly we have a great platform for games," Forstall says. "It's also great for verticals." Salesforce.com is the next demo. Chuck Dietrich, a Salesforce representative, comes on stage.

Salesforce automation application comes on screen. There's a needle showing how a sales guy is doing, on a spectrum from red to green. A full iPhone toolbar on the bottom, and a native iPhone list at the top.

Ability to set the sort order on their business data, resort a list, so that sales people can know what to focus on. The iPhone SDK talks back to the Salesforce API, so things can happen dynamically, automatically querying back to the source database.

10:53 PT: Next up is AOL. Yes, kids, we're talking AIM on iPhone!

There's a buddy list, with icons on the left, blue arrow icon on the right. They had never done any Mac development before, came with no code, and they had the live buddy list UI running in five days. Now they're showing chatting, and it's a series of boxes with text, buddy icons, and the like. Then swipe your finger to switch among active chats. (The audience oohs and aahs.)

There's a Profile panel that lets you set your status and the like. You can even use your iPhone photos to set a new buddy icon.

"We're really looking forward to working with Apple to bring AIM to the iPhone," the AOL rep says.

10:56 PT: Next: Epocrates. "Every doctor knows about Epocrates." Now Glenn Keighley from Epocrates. Shows a drug lookup UI, so doctors can find a drug, tap to view information about the drug. They used SQLite to store their drug data, and used the iPhone's high-resolution screen to show drug images for the first time on any mobile platform.

11:00 PT: Last demo, Sega. More iPhone game demos!

Super Monkey Ball demo. Using the accelerometer to control the monkey rolling in the ball by tilting the iPhone.

"If anything, we underestimated what the hardware was able to do," Sega guy says. He says this is not a scaled-down cell phone game. It's a console game. They had to bring in an artist to up-scale the resolution of the graphics on the iPhone.

11:03 PT: So now the big question. How do you get these apps on your phone? And for that, we throw it back to Steve Jobs.

"You're a developer. What is your dream? Your dream is to get it in front of every iPhone user. That's not possible today. Even big developers would have a hard time getting their app in front of every iPhone user. We're going to solve it, with what we call the App Store, an application we've written to deliver apps to the iPhone. And we're going to put it on every single iPhone with the next release of the software."

App store looks familiar—it's a lot like the iTunes app for the iPhone. Featured items, categories, top lists, searchability, the whole thing.

Tap the price (in the demo it was free) and then tap again for Install, and it downloads—over wi-fi or cell network.

You can also buy programs via iTunes and install them from your computer, if you like.